7 Tips for Managing Your Mortgage Payments During Covid-19
Properly managing your mortgage payments during the Covid-19 pandemic can make a huge difference in your future. Mishandling the situation could leave you facing foreclosure. As life returns to normal, facing a foreclosure during recovery will simply make everything more challenging. So, we have put together some tips for navigating these times. These tips can help protect you from losing your home to foreclosure.
1. Don’t Panic
If you can’t pay your mortgage due to the pandemic, assistance will be available. If lenders started foreclosure proceedings on all of the now past due mortgages, it would be a disaster for everyone. Accordingly, the last thing a lender wants to due is foreclose on a homeowner with a good payment record who was affected by circumstances beyond their control. Also, the foreclosure process can be lengthy, and you would have time to use legal remedies to stop the process.
2. Continue Paying Your Mortgage if You Can
During the mortgage crisis of 2007, some homeowners intentionally stopped paying their mortgages. Their strategy was to obtain a loan modification, and improve the terms of their mortgage. Well, that is a dangerous game to play. Ultimately, some homeowners who took this risk were successful. However, many of them lost their homes to foreclosure. If your income has not been interrupted, just keep making your mortgage payments.
But let’s say, for example, one family member has lost their income and household income has been reduced. This would be considered a genuine hardship. If the hardship is making your mortgage payment unaffordable, (roughly more than a third of the household income), then a loan modification may be appropriate. If you find yourself in this position, be careful. As always, you should continue to make your mortgage payments if possible. But, you should also reach out to your lender, explain the situation, and see if they are willing to help before it becomes a problem.
3. Document Your Financial Situation Carefully
No matter what, you will want to document your situation carefully. If banks start to offer programs for relief, they will require documentation to validate your situation. You will want to be able to show them documentation of relevant dates, reduction in income, and basically every bit of documentation that supports any hardship(s). This can end up being pivotal to managing your mortgage payments during Covid-19
4. Speak To Your Lender
It is more than likely that your lender will be offering programs to assist homeowners affected by the Covid-19 pandemic. Those programs can differ from state to state, and lender to lender. If you are unable to make your mortgage payments, you should contact your lender immediately. There are also resources now being allocated at all levels of government to assist homeowners. Your lender will likely be aware of available programs, as the programs benefit your lender as well. No matter what, if you foresee trouble with your mortgage payments as a result of the crisis, you should contact your lender directly.
5. Get Everything in Writing.
In the mortgage crisis of 2007, millions of homeowners lost their homes. Many of those homeowners had legitimate hardships, but failed to correctly present supporting documentation to their lenders. In many other cases, lenders would “lose, misplace, or claim to have never received” the documentation. For this reason, you should keep detailed records of all communications with your lender. At the first sign of trouble, you should speak to an attorney. The documentation you have compiled will assist your attorney in representing your interests, if that becomes necessary.
6. Keep Your Commitments
Many times, lenders will offer assistance in the form of a trial loan modification. Theoretically, if you complete the trial, the modification would become permanent. If you fail to complete the trial with timely payments, the lender may not give you a second chance. At that point, it is likely that you might need an attorney to effectively represent your interests. So, if you are offered a trial modification or reinstatement plan, you should do everything you can to make those payments. That being said, we have seen plenty of homeowners complete a trial modification, only to have their lender not honor their end of the bargain. Again, this is why we recommend keeping detailed records, and speaking to a foreclosure defense attorney at the first sign of trouble.
7. Hire an Attorney
These days, you can find experienced foreclosure defense and loss mitigation attorneys. Many have been practicing for a decade or more. They understand the finer points of negotiating lasting solutions for homeowners experiencing hardship. In addition, most of these attorneys offer affordable fees and payment plans. They also offer a free evaluation. So, at the first sign of trouble, speak to an attorney. You may be surprised at how much they can help. We are long standing advocates of attorney representation for distressed homeowners. We also recommend that you not be taken in by “loan modification” companies. Given the widespread impact of the pandemic and its economic repercussions, it is likely that the opportunist “loan mod” companies will start popping up again. The best way to protect yourself and avoid being scammed is to hire a legitimate foreclosure defense attorney with lengthy experience.